Japan’s Topix Rises in Late Trade to Close Higher for Third Day

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Japan’s Topix index rose in the final 30 minutes of trading to close higher for a third day as precision instrument makers led gains. Sharp Corp. surged after plunging on Monday.

Sharp jumped 11 percent, the most on the Nikkei 225 Stock Average and recouping some of Monday’s biggest drop since 2012, after the maker of displays for Apple Inc. said it’s considering cutting capital. Chipmaker Hoya Corp. jumped 6.7 percent after saying it will buy back shares. Ebara Corp. added 7.1 percent as the pump manufacturer boosted its dividend forecast. Tiremaker Bridgestone Corp. sank 3.3 percent after reporting profit that missed analyst estimates.

The Topix index gained 0.3 percent to 1,602.27 at the close of trading in Tokyo, erasing losses of as much as 0.7 percent. Volume on the measure was 21 percent above the 30-day average. The Nikkei 225 was little changed at 19,624.84. The yen traded at 120.18 per dollar after weakening 0.3 percent Monday.

“More companies than initially expected are returning cash to shareholders by buying back shares or increasing dividends,” said Tokushi Yamasaki, chief analyst at Daiwa Securities Co. “People say the market gets sold off in May, but aggressive returns to shareholders are working to support it.”

U.S. stocks slipped Monday from near all-time highs, after rallying the most in two months on Friday. Policy makers could raise U.S. interest rates at any meeting, depending on economic data, Federal Reserve Bank of San Francisco President John Williams reiterated on CNBC Monday.

U.S. Futures

E-mini futures on the Standard & Poor’s 500 Index were little changed. The underlying measure fell 0.5 percent on Monday in New York.

“There’s a lack of factors to give us direction,” Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo said by phone. “The situation in Greece still remains a negative factor. U.S. companies are beginning to recover, and yen is trading at 120 to the dollar.”

Greece handed the European Central Bank an excuse to maintain the life support for its financial system by persuading its skeptical German-led creditors it’s serious about delivering the policies needed to escape a default.

Pressure on the two sides had intensified with the ECB due to reassess the emergency liquidity lines keeping the Greek banking system in business on Wednesday. Although some central bankers are pushing for stricter terms, it’s now unlikely that policy makers will decide to restrict funding this week, according to two European officials.

Company Earnings

Kubota Corp., Daikin Industries Ltd., Mitsubishi Estate Co. and DeNA Co. are among companies reporting earnings Tuesday in Tokyo. Of the Topix companies that have posted results this season and for which Bloomberg has estimates, 47 percent have posted better-than-expected profits, down from 67 percent in the previous period. Some 56 percent reported higher-than-predicted revenue, up from 53 percent.

Sharp jumped 11 percent, its biggest gain since June 2013. The stock slumped 26 percent yesterday to close at a 2 1/2-year low after a person familiar with the matter said the company will cut its capital by more than 99 percent and issue preferred stock.

Ebara jumped 7.1 percent, the most in a year, after forecasting a 12 yen per share dividend payment, up from its previous forecast of 10 yen. The pump maker also forecast profit of 24 billion yen, more than analyst estimates for 20.6 billion yen.

Instrument Makers

Hoya added 6.7 percent, the biggest boost to the Topix Precision Instruments Index, after saying it’ll buy back about 2.4 percent of its shares. The company also posted a 59 percent increase in profit.

Bridgestone slid 3.3 percent, leading declines on the Topix Rubber Products Index, after saying operating profit was little changed on the year at 116.3 billion yen, missing the 130.4 billion yen mean estimate of analysts.

Taiyo Yuden Co. tumbled 6.8 percent, the second-biggest drop on the Nikkei 225, after forecasting operating profit of 19 billion yen, missing analyst estimates for 21 billion yen.

“There were high expectations for earnings on some stocks and they’ve put out some big drops,” said Tomomi Yamashita, who helps oversee the equivalent of $6.3 billion at Shinkin Asset Management Co. in Tokyo. “Earnings are good overall, but expectations were very high, so that’s being corrected somewhat now.”

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